A. Basis for preparation of accounts
i) The financial statements have been prepared to comply in all
material respects with the mandatory Accounting Standards issued by the
Institute of Chartered Accountants of India and the relevant provisions
of the Companies Act, 1956. The financial statements have been prepared
under the historical cost convention using accrual method of accounting
in accordance with the generally accepted accounting principals.
ii) Accounting policies not specifically referred to otherwise are
consistent with generally accepted accounting principles followed by
B. Use of Estimates
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known /materialized.
C. Own Fixed Assets and depreciation
i) Fixed Assets are stated at cost net of recoverable taxes and
includes amounts added on revaluation, less accumulated depreciation
and impairment loss, if any. All costs including financing cost till
commencement of commercial production attributable to fixed assets are
ii) Depreciation on fixed assets other than vehicles and furniture is
provided on straight line method at the rates and in the manner
prescribed in schedule XIV of the Companies Act, 1956. Depreciation on
vehicles and furniture has been provided on written down value method.
iii) The depreciation on plant and machinery and effluent treatment
plant has been provided on the rates applicable to continuous process
D. Impairment of Assets
An asset in treated as impaired when the carrying cost of asset exceeds
its recoverable value. An impairment loss in charged to the profit and
loss account in the year in which an asset is identified as impaired.
The impairment loss recognized in prior accounting period is reversed
in there has been a change in the estimate of recoverable amount.
E. Foreign Currency Transactions
i) Transactions denominated in foreign currency are recorded at the
exchange rate prevailing on the date of transaction or that approximate
the actual rat at the date of the transaction.
ii) Any income and expense on account of exchange difference either on
settlement or on transaction is recognized in the profit and loss
account except in the case of long term liabilities, where they relate
to acquisition of fixed assets, in which case they are adjusted to the
carrying cost of such assets.
Long term investments are stated at cost. Provision for diminution of
the value of long term investments is made only if such a decline is
other than temporary.
i) Inventories are valued at the lower of cost and net realizable
value. The cost is computed on First in First out (FIFO) basis.
ii) Cost for the purpose of valuation of finished goods and goods in
process is computed on the basis of cost of material, labour and other
iii) Scrap stock is valued at estimated realizable value.
H. Revenue recognition
i) Revenue is recognized to the extent that is probable that the
economic benefit will flow to the Company and the revenue can be
ii) Sales are recognized when goods are supplied and the significant
risks and rewards or ownership of the goods have passed to the buyer.
iii) Dividend income is accounted in the year in which it is received.
Interest income is recognized on time proportion basis taking into
account the amount outstanding and rate applicable.
I. Employee Benefits
i) Short term benefits employee benefits are recognized as an expense
in the profit and loss account of the year in which the related service
ii) Post employment and other long term employee benefits are
recognized as an expense in the profit and loss account for the year in
which the employee has rendered the services. The expense is recognized
at the present value of the amounts payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect post
employment and other long term benefits are charged to the profit and
J. Borrowing Costs
Borrowing costs that are attributable to acquisition or construction of
a qualifying asset are capitalized as a part of cost of such assets.
Qualifying asset is one that necessarily takes substantial period of
time to get ready for its intended use. All other borrowing costs are
recognized as expenses in the period in which they are incurred.
K. Provision for Current and Deferred Tax
Tax expense comprises both current and deferred taxes. Deferred Income
Taxes reflect the impact of current year timing differences between
taxable income and accounting income for the year and reversal of
timing differences of early years. Deferred tax is measured based on
the tax rates and the tax laws enacted or substantively enacted at the
balance date. Deferred tax assets are recognized only to the extent
that there is reasonable certainty that sufficient future taxable
income will be available against which such deferred tax assets can be
realized. Deferred tax assets are recognized on carry forward of
unabsorbed deprecation and tax losses only if there is virtual
certainty that such deferred tax assets can be realized against future
taxable profits. Unrecognized deferred tax assets of earlier years are
reassessed and recognized to the extent that it has become reasonably
certain that future taxable income will be available against which such
deferred tax assets can be realized.
L. Segment Reporting
The company produces only Paper and accordingly the entire business has
been considered as one single segment. The secondary segment is
geographical determined based on the location of clients. Clients are
classified as either India or Overseas.
M. Provisions, Contingent Liabilities & Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be out flow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes. Contingent assets are neither recognized nor disclosed in the